Gold surged to unprecedented heights while the dollar took a hit, sparked by a criminal investigation targeting the Federal Reserve’s chief. Concerns over the Fed’s autonomy intensified among investors.

The inquiry into Jerome Powell sent ripples through financial markets, propelling gold to an impressive $4,601 per ounce. Simultaneously, the British pound strengthened, nearing $1.35 as the dollar weakened.

Silver also experienced a significant rise, reaching an all-time high of $84.60 per ounce.

Fed chairman Jerome Powell speaks out in video message 

Experts suggest that gold is edging closer to the $5,000 threshold for the first time, with silver potentially climbing to $100.

The market volatility reflects investor anxiety about the Federal Reserve’s capacity to independently manage interest rates amidst mounting pressure from former President Donald Trump.

There are growing concerns that the Fed could succumb to demands from the White House for more drastic interest rate cuts.

The investigation into Powell – over the near-£2bn refurbishment of the central bank’s headquarters – added to a frenetic start to 2026 which has already seen the US capture of Venezuela president Nicolas Maduro and threats to Greenland.

‘The latest development marks a significant escalation in the fight between President Trump and Fed chair Powell,’ said Lee Hardman at Japanese banking giant MUFG.

Andrew Lilley, chief rates strategist at Sydney-beasd investment bank Barrenjoey, added: ‘Trump is pulling at the loose threads of central bank independence. Investors won’t be happy about it.’

The move represents the most serious legal threat Powell has faced since becoming Fed chairman and places the independence of the central bank squarely in the political crosshairs.

Trump has repeatedly attacked Powell – whose term ends in May – for refusing to sharply cut interest rates.

The President has described Powell as a ‘numbskull’ and said he would like to ‘fire’ him.

But he denied any involvement in the criminal investigation.

‘I don’t know anything about it, but he’s certainly not very good at the Fed, and he’s not very good at building buildings,’ Trump said.

Donald Trump and Jerome Powell clash over the cost of the refurbishment of the Federal Reserve during a visit to the central bank in July 

The price of gold has soared to a new record high above $4,600 an ounce

In a rare video message, Powell called the investigation ‘unprecedented’ and directly challenged its legitimacy.

‘The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,’ he said.

‘This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions – or whether instead monetary policy will be directed by political pressure or intimidation.’

Ray Attrill, head of currency strategy at National Australia Bank, said: ‘This open warfare between the Fed and the US administration. It’s clearly not a good look for the US dollar.’

Russ Mould, investment director at AJ Bell, said: ‘The probe has unnerved markets and raised questions about what might happen to the Fed once Powell steps down in May. There is a fear that Trump is meddling too much with policies that are meant to be set independently.

‘Trump wants to lower borrowing costs, so consumers and businesses spend more money and propel the economy. However, what’s worrying markets now over Trump’s implied intervention is that the loss of Fed independence could lead to inflation getting out of control.

‘Investors rushed to buy gold, taking the precious metal price to a new record high of just over $4,600 per ounce. It’s a popular hedge against inflation and it is an asset with safe-haven qualities that often shines in an uncertain market.’

Nick Cawley, contributing analyst for gold and silver supplier Solomon Global, said: ‘Against this volatile background, and with investors moving away from the US dollar, demand for safe-haven assets continues. 

‘Gold and silver look set to push higher over the coming weeks. Both metals close in on important ‘big figures at $5,000 and $100 respectively. These levels act as important reference points for investors and will likely spark a new round of volatility. For longer-term investors, any sell-off from these levels provides a renewed opportunity to enter the market.’

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